UMNO Youth urged the government today to consider allowing workers to withdraw their savings in Account 1 of the Employees Provident Fund (EPF).

Dr Asyraf Wajdi Dusuki said the government could limit each withdrawal to RM5,000 or RM10,000.

Withdrawals could also be spaced out over a period of time instead of in one lump sum, said the Umno Youth chief.

“The fact is that people are crying out and worried about their difficulties in the midst of Covid-19 which directly impacts their lives at this point,” he said o Facebook.

“Once the situation improves, the contributor can be encouraged to raise their contributions.”

He said Umno Youth will formally convey the people’s wishes to Finance Minister Tengku Zafrul Tengku Abdul Aziz soon.

Former prime minister Najib Razak suggested that EPF contributors be allowed to withdraw their savings every three months or six months.

“And when the money reaches the people in need, they will spend it and that will spur the economy,” he said on Facebook.

He said EPF might face financial contraints if lump sum withdrawals were allowed.

About 4.75 million people are approved to withdraw from their EPF Account 2 via the i-Lestari scheme over several months. The withdrawals amount to RM7.48billion.

If an equal number of people were to withdraw RM10,000 each from Account 1, EPF would need to pay out RM47.5 billion.

EPF recorded a  gross investment income of RM15.12 billion in the second quarter of 2020 while its investment assets stood at RM929.64billion as of June 30.

As 49.2% of its investments are in the form of bonds, the pension fund is concerned that a rush to withdraw  will cause the value of the bonds to depreciate in a short period.

Najib said should that happen, Bank Negara could come to the rescue by purchasing the local bonds.

He said inflation rates were in the negative across the world because of the economic downturn.

He said this was the new normal, and new approaches were required from the government to help the people and revive the economy.

“It is difficult but not impossible to do.”

Muhyiddin has said that it would be “difficult” to allow EPF Account 1 withdrawals and that the government has already given out billions of ringgit in aid.

He said the Account 1 savings were for financial security upon retirement.

EPF chief executive officer Tunku Alizakri Alias said the request was a “hard one to deliver”.

“Accessing their hard-earned savings in Account 1 should not be the only way for our members to get cash in order to get through these very difficult times,” he said. – October 31, 2020.